A CEO's Lesson: Fire Yourself, Then Hire Yourself

Last Updated Sep 2, 2008 12:03 PM EDT

A CEO's Lesson: Fire Yourself, Then Hire YourselfManagers need to learn skills and strategies for downsizing as well as building. There is a right way to take apart an organization.

The wrong way was used by Home Depot's former CEO Bob Nardelli, according to Columbia Business School professor Rita McGrath on her blog post Cut Costs Like Avon -- Not Home Depot. Nardelli cut costs for sure, but he did it the wrong way, chainsawing through the company's culture.

What I liked best about McGrath's lesson was her look at Avon CEO Andrea Jung. Jung got some hard advice after Avon missed the numbers in two consecutive quarters. The counsel from a friend was this: You are going to be sacked soon, so why not fire yourself this weekend and rehire yourself as a turnaround artist starting Monday.

"Despite the need for tough choices, involving cutting staff (30% of her own hand-picked managers were let go), changing marketing programs, reversing course on investments she had previously advocated making, Jung never lost sight of her deep understanding of what Avon is all about. She recently described the heart and soul of the company as empowering women one woman at a time to learn how to earn.'"

Has the two-year turnaround worked? In its June quarter, Avon produced the best top line and bottom line results since 2005, and its stock since July 1 has jumped 20 percent.

If you are in the unlucky position of having to take down some of what you had built up, do it with sensitivity to the employees and their families you have to cut loose, but also with sensitivity to your company's core values.

(Demolition image by Editor B, CC 2.0)

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.